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Glencore's Rolleston Stops Coal Production in Australia for Two Weeks



By Jenny Ma

June 4, 2020 - Glencore's Rolleston coal mine in Queensland, Australia, has stopped production for two weeks starting June 2, sources told S&P Global Platts June 3. The coal mine was heard to be making losses at the prevailing market price.

The move comes weeks before the upcoming 59-day closure of Peabody's Wambo underground thermal and semi-soft coking coal mine in New South Wales, Australia, starting June 19 amid weaker demand, sources said.

The Wambo underground mine sold 2.2 million mt of coal in 2019, according to its company website. Sources said of the total coal sold in 2019, about 1.8 million mt was thermal coal.

After TerraCom cut its production guidance at Blair Athol mine for 2020 and 2021, and Peabody's Wambo mine's upcoming closure, Glencore's Rolleston is the third mine with downward adjustment on production, sources said.

Rolleston mainly produces 5,500 kcal/kg NAR Australian coal targeted for China's market, according to sources. The mine has an annual production capacity of 13.94 million mt of run-of-mine thermal coal, its company website showed.

Glencore declined to comment while Peabody was not available for comments.

Elsewhere, New Hope's Bengalla mine in New South Wales, Australia, has planned for an upcoming maintenance which has been factored into the production numbers of the year, New Hope's spokesperson said June 2. "It is a planned shutdown and has been staged to ensure no impact on the mine's annual production," he added.

The mine has suffered from lower margins and higher run-of-mine stock ever since the five major state-owned utilities were reportedly warned by China's National Development and Reform Commission (NDRC) for fresh Australian coal purchase on May 15, sources said.

"They probably have no space for their run-of-mine stocks," a Singapore-based trader said.

Demand Condition

Buyers in China complained about the increasing difficulties to import Australian coal and muted trading activities while sellers noted a dip in enquiries ever since May 15, sources said.

Platts assessed FOB Newcastle 5,500 kcal/kg NAR at $41.50/mt FOB on June 2, down $3/mt as compared to May 15.

In Japan, despite the recent recovery from COVID-19, buyers have no additional demand for coal due to lower power demand amid slow recovery of heavy industries in Japan, several sources said.

"Some reduction in supply has no major impact on coal prices," a trader said.